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Global coffee chain Starbucks said it will close several hundred stores across North America as part of a $1 billion restructuring plan, citing declining performance. The move comes as the company faces sustained consumer boycotts over its perceived support for Israel.
The closures will reduce Starbucks’ company-operated store count in the United States and Canada by about 1% by the end of fiscal year 2025.
Among those slated to shut down is the company’s flagship roastery in Seattle, a unionized location situated near Starbucks’ headquarters. The company explained that stores were selected for closure where financial recovery seemed unlikely or where customer expectations could not be met.
The restructuring comes against the backdrop of widespread boycott campaigns that began in October 2023, after Starbucks was accused of supporting Israel during the Gaza conflict. The campaigns spread rapidly across the Middle East and other regions, severely impacting store traffic and sales.
Starbucks lowered its sales forecasts after reporting steep declines in its Middle Eastern markets. In North America, the company has endured six consecutive quarters of declining sales, with consumers turning away from premium-priced drinks as boycotts gained traction and competition intensified.
The chain reported that its global operating margin fell 6.5% in the latest financial period, attributing the decline to consumer boycotts and higher coffee prices.
CEO Brian Niccol said the company aims to restore what he described as a true "coffeehouse" atmosphere while also shortening service times. Plans include revising staffing models and using technology to improve order sequencing.
"During the review, we identified coffeehouses where we are unable to create the environment customers and employees expect, or where there is no path to financial performance, and these locations will be closed," Niccol said in a letter to employees, Reuters reported.
The company expects most closures to be completed by the end of the fiscal year.
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